Medicare Fraud Takedown Results in 243 Arrests

On June 18th, Attorney General Loretta E. Lynch and Department of Health and Human Services (HHS) Secretary Sylvia Mathews Burwell announced a nationwide sweep led by the Medicare Fraud Strike Force across 17 districts that led to the arrest of 243 individuals for their alleged participation in Medicare fraud schemes. The 243 individuals are accused of producing approximately $712 million in false billings spanning across various medical treatments and services, including home health care, psychotherapy, physical and occupational therapy, durable medical equipment and pharmacy fraud.  Among the 243 individuals arrested, at least 44 are charged with fraud related to Medicare prescription drug benefits under Part D.

The arrests came shortly after an HHS Office of Inspector General (OIG) report titled, “Ensuring the Integrity of Medicare Part D,” in which the OIG outlined a number of vulnerabilities to fraud that exist within the Part D program. Among the potential fraud vulnerabilities outlined were the billing of non-rendered services, drug diversion, and an increase in organized criminal networks committing health care fraud, including medical identity theft. Additionally, the OIG had 540 pending complaints and cases involving Part D as of May 2015, a 134% increase in the last 5 years.

The OIG report stresses the evident vulnerability of Part D to fraud schemes that often result in beneficiaries being victimized or being complicit.  The recommendations to curb Part D fraud schemes going forward include requiring sponsors to report all potential fraud and abuse to CMS and/or MEDIC, requiring sponsors to report data on all incidents filed and corrective actions taken related to fraud and abuse, and implementing greater restrictions to ensure certain providers and beneficiaries are limited in their prescription access.

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OIG Report
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Recent Analysis on Potential Medicare Part B Overspending

Overused Medical Services Cost Medicare Billions Of Dollars– Harvard Medical School study finds prevalent use of “low-value” services for Medicare beneficiaries in 2009.

For Some Doctors, Almost All Medicare Patients Are Above Average-ProPublica analysis of CMS’ recent release of 2012 Medicare Part D spending data shows that certain doctors bill Medicare exclusively at the highest level for office visits.

New Medicare Guidance Aims to Prevent Duplicate Payments for Drugs in Hospice

New Medicare guidance went into effect today to prevent duplicate payments for drugs beneficiaries receive while in hospice care. Drugs related to palliative, end-of-life care are covered by the hospice benefit, while other drugs are supposed to be covered by Part D. When hospice care-related drugs are covered by Part D, Medicare is essentially paying twice for the same prescription. A 2012 OIG investigation found that in 2009, Part D plans paid more than $33 million for drugs that should have been covered by the hospice benefit, and beneficiaries paid nearly $4 million in copayments. 

The new rule requires Part D sponsors to “place beneficiary-level prior authorization (PA) requirements on all drugs for beneficiaries who have elected hospice to determine whether the drugs are coverable under Part D.” Following standard PA procedures, after the initial claim is rejected, the patient or doctor, with the hospice provider’s agreement, must explain why the drugs are not related to hospice care. Sponsors must then decide whether to cover the drugs, though CMS has not yet provided objective criteria for payment determinations.

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OIG Finds That More Than Half of Part D Plan Sponsors Not Reporting Fraud and Abuse

The Office of Inspector General reviewed Part D sponsor-reported data on fraud and abuse between 2010 and 2012, 64,135 incidents in total, and published the following findings:

• more than half of sponsors did not report data on potential fraud and abuse
• of the sponsors that reported data, more than one-third did not identify any potential fraud or abuse in at least one of the reporting years
• sponsor identification of potential fraud and abuse varied greatly, from 0 to almost 14,000 incidents a year
• though CMS requires sponsors to investigate and undertake corrective actions, 28 percent of Part D sponsors reported performing no inquiries or corrective actions regarding potential fraud and abuse
• CMS did not perform quality assurance checks on sponsor reported data or use the data to monitor the Part D program

The OIG recommended that CMS specifically require sponsors to report potential fraud and abuse to CMS and provide guidelines on how sponsors should report incidents. Furthermore, potential fraud and abuse data should be shared with all Part D sponsors and law enforcement to better identify fraud schemes. CMS responded saying that guidance was already provided to sponsors on how to report incidents, and that requiring sponsors to report incidents to CMS would be redundant since a contractor already collects this information. Also, CMS already provides data to law enforcement upon request and works with law enforcement in quarterly Fraud Work Group meetings. The OIG also recommended that CMS investigate the large variations in the number of incidents reported by sponsors, to which CMS fully agreed.

OIG Study

Medicare Part D Fraud

In “Let the Crime Spree Begin,” NPR and ProPublica explore the vulnerabilities in Part D policy that allow elaborate fraud schemes to flourish. One major issue is timing- Part D requires insurance companies to pay for prescriptions within 14 days, a requirement passed by Congress in 2008 after pharmacies complained about payment delays. As a result, insurers must cover suspicious claims without thorough investigation.

Furthermore, insurers are not allowed to block claims from suspect prescribers and pharmacies. Only after a doctor is formally excluded from Medicare by the inspector general, a process that can take months and a conviction, will Part D stop covering his/her prescriptions. This “pay and chase” approach contrasts with the authority insurance companies have for non-Medicare plans to review prescriptions and take action against fraud.

NPR and ProPublica investigated several instances of fraud, some involving single doctors and others involving a network of doctors, pharmacists, and other medical professionals. Some doctors were the victims of identity theft and had no connection to the millions of dollars prescribed under their provider ID. In each instance, the huge increase in prescriptions written by these doctors should have warranted immediate investigation. Changes in policy that give insurance companies more power to address fraud, and more swift and decisive action from Medicare fraud officials could reduce the vulnerabilities in the system.

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CVS Caremark Takes Action to Stop “Pill Mills”

CVS Caremark’s recent initiative to limit inappropriate prescribing of high-risk drugs (i.e., hydrocodone, oxycodone, alprazolam, methadone, and carisoprodol) demonstrates a role that pharmacies can play in patient safety. Using submitted prescriptions for the aforementioned drugs, CVS Caremark identified and contacted prescribers they believed to be outliers relative to their geographic region and medical specialty. If outliers did not respond or did not provide legitimate reasons for their prescribing habits, CVS Caremark stopped filling their prescriptions.

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